All of Chin and Rakhine, Most of Kachin to Offer 7-Year Tax Breaks Under New Investment Rules

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The Myanmar In­vestment Commis­sion has released a list of townships that will be able to offer in­vestors special income tax exemptions under the new investment law, due to come into effect next month.

The commission has di­vided the country’s town­ships into three categories from Zone 1, least devel­oped, to Zone 3, most de­veloped.

Investors who pursue projects in Zone 1 town­ships will be eligible for tax breaks of up to seven years. The government hopes the new scheme will help direct some of the billions of US dol­lars now flowing into the country annually towards the regions most in need of development.

Fourteen of the 18 town­ships in conflict-torn Kachin state qualify for least developed status un­der the new bylaws, with the notorious jade mining region of Hpakant falling into Zone 2.

Every township in Chin and Rakhine states, con­sidered the two least de­veloped in the country, has been included under Zone 1.

Only townships in Man­dalay and Yangon, the country’s two largest cit­ies, qualified for Zone 1 status. However, even in those regions several pe­ripheral townships fall into Zone 2. None of Yan­gon’s townships are clas­sified as least developed but two in Mandalay – Ngazun and Myingyan – have been granted Zone 1 status.

Ventures that carry out more than 65 percent of their operations in town­ships with least developed status will be eligible for a seven-year income tax break.

Zone 2 investments are eligible for a five-year break while those in Zone 3, which only includes townships in Mandalay and Yangon, can apply for three-year breaks.

However, the decision to grant a tax break will depend on the nature of the investment, as well as the region targeted.

Under the old rules, all new ventures automati­cally qualified for a five-year exemption.

U Aung Naing Oo, the investment commission’s secretary, has said that this was a “mistake”. At a seminar last year he singled out alcohol and cigarette companies that had benefitted from the scheme and argued they should not have received any tax breaks.

The new investment law is designed to give the government more pow­er to grant exemptions to ventures that benefit particular sectors and re­gions.

 

Source: Myanmar Business Today
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